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    Spend Smart: Be Thrifty, Budget Better, and How to Spend Your Money When You Don’t Have Much - Without Compromising Your Lifestyle
    Spend Smart: Be Thrifty, Budget Better, and How to Spend Your Money When You Don’t Have Much - Without Compromising Your Lifestyle
    Spend Smart: Be Thrifty, Budget Better, and How to Spend Your Money When You Don’t Have Much - Without Compromising Your Lifestyle
    Ebook85 pages1 hour

    Spend Smart: Be Thrifty, Budget Better, and How to Spend Your Money When You Don’t Have Much - Without Compromising Your Lifestyle

    By Zoe McKey

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    About this ebook

    Do you spend on a lot of junk that doesn’t make you happy? Instead of happiness, does money bring anxiety, stress,& debt into your life?



    If your savings account is nonexistent and you have no idea where your hard-earned money is going, it’s time to redefine your spending habits.
    Living alone from the age of 14, I learned how to spend and manage money the hard way. Since my early teenage years, I had to earn my own money – which sometimes barely exceeded $150 for a month. In this book I’m sharing my insights on how to manage even the smallest income to outlast the month, and how to spend smarter on more fulfilling things.
    This book can help those people working their first jobs, or experienced people that just make poor money decisions. I will highlight the most common money myths, marketing tricks, and irrational beliefs people fall prey for and teach you to avoid them.


    Take charge of your money today.



    •Scientific research about the psychology of our spending habits
    •Learn how to spend less and save more and still enjoy life – regardless of your income
    •How to assess value to make the best financial decision
    •Map out your spending patterns to know where you need to change


    Like it or not, money is part of everybody’s life. Learn to control it instead of letting it control you.



    •The top 5 reasons people spend money
    •Why the Six Persuasion Principles by Robert Cialdini get us almost all the time?
    •Understand online shopping and credit cards. Why are you more willing to spend using these?
    •Marketing tricks that always get you – deconstructed from subtle to overt
    You can turn a blind eye to your financial problems, but they won’t disappear. Learn about the best personal finance practices of the rich and happy live a financially balanced life in the future. Build a solid foundation for your family and yourself.
    There is a thin line between being cheap and frugal. Learn how to spend without getting labeled as cheap and without sacrificing your family’s wellbeing.


    Arm yourself against the most common spending mistakes.



    •How to break the vicious circle of shopping habits
    •Financial literacy crash course: A-Z finance vocabulary, the five pillars of financial literacy and more.
    •4 things you should invest in
    •Financial fasting and how to use it to your benefit
    •Key takeaway summaries at the end of each chapter


    Get financial awareness in your life:



    •Get a clear picture on the difference between the 401(k), 403(b), TSP, IRA and Roth accounts
    •TRFs (Target Retirement Funds), HSAs (Health Savings Accounts) and RMDs (Required Minimum Distributions)
    •Why should you have F-you money
    •How can your money take you to financial independence (The 4% rule.)
    Financial literacy changes the rest of your life. You will have a better relationship with money by thinking about it differently. You will know the unique ways to spend smarter and build wealth. Imagine not worrying about debt, bills and late payment fees anymore.


    Picture paying for things that actually add value and happiness to your life. Follow the tips presented in this book and make it reality.

    LanguageEnglish
    PublisherPublishdrive
    Release dateMar 10, 2019
    ISBN9781722656768
    Spend Smart: Be Thrifty, Budget Better, and How to Spend Your Money When You Don’t Have Much - Without Compromising Your Lifestyle

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      Spend Smart - Zoe McKey

      Endnotes

      Introduction

      Money by itself doesn’t have any value these days. In pre-modern history, coins were partially made of silver or gold. Today, money is just a piece of paper, gold-less coins, or even less—a few digits on a virtual bank account. Money represents value—the value of the things we plan to buy with money.

      Today, we don’t even realize how much easier our life is, thanks to money. We don’t have to decide how many strawberries we need to give in exchange for a sheep. Heaven forbid the neighbor doesn’t want to exchange his sheep for strawberries, because that’s the only good you can offer for it.

      Modern money has four crucially important characteristics that make it so easy to use, and thus popular.

      It is general. We can exchange money for strawberries and sheep, and everything else, really.

      It is divisible. You can break money down to the smallest cent to pay for your product.

      It is fungible. It doesn’t matter which country you’re in; you can exchange your currency and get the same value of the foreign currency in return. You can go with your $10 to Istanbul and get 47 Turkish liras for it. Same value.

      It is storable. You don’t need to store a warehouse worth of strawberries for the goat. You can keep your money in a small space, or these days in no place at all, just your computer. Money doesn’t spoil in three days like strawberries do. It will be ready to use even in 100 years (let’s assume we’d still use the same papers and there is no inflation).

      Basically, money can be used anytime, anywhere to buy anything. We tend to take this fact for granted today. Okay, I get it. Money is awesome and all, but why do we have so many problems because of it? you may ask.

      Money has its blessings and curses. On one hand, it is unquestionable that thanks to money, our lives have become much more colorful. We can become doctors, lawyers, and singers thanks to money. We can eat salmon, Indian samosa, or Peruvian chicken. We can do bungee jumping, sleep in a five-star hotel, or get our cat a cat house. The question is—and this is the curse part—which one should we choose?

      Even if we had unlimited money and we could buy whatever we wanted, we still have limited time. We have one stomach to fill and one career path to truly master in a lifetime. Each choice we make costs us a hundred other things we choose not to do. This is called the opportunity cost.

      Just because money can be spent on anything doesn’t mean that we will be able to spend it on everything we want. We need to choose, and thus sacrifice other things. Every choice we make costs us something—another meal, activity, or cat we couldn’t get.

      Each time we open our wallet and use our money, we also pay an opportunity cost. Choosing to buy something means also choosing not to buy something, or choosing not to do something (often, not even in the future).

      Not many people think about opportunity costs when they spend their money. We don’t weigh that the new phone we don’t need may cost us 10-15 nights out with our friends, a week-long trip somewhere nice, three sheep, or 200lbs of strawberries.

      Considering opportunity costs is a crucial part of establishing good spending habits so that we buy the things we value and care about most. We should consider alternatives, especially before making a big purchase. This lack of consideration is the foundation of the bad financial decisions house we are living in.

      Neglecting opportunity costs regularly reveals the errors in our thinking. We don’t look at spending money in terms of what one buys today may stop them from being able to buy or do something in the future. This is not a natural way of thinking; it is difficult to take opportunity costs into consideration, and therefore, we don’t do it. This messes up our relationship with money.

      Today, our situation is even worse than before because we have much more financial instruments at hand—like loans and credit cards—which further cloud our judgment on what future financial effect our current spending will have.

      This book aims to help you see the long-term effects of your daily spending clearly, establish better spending habits, and ultimately become happier with what you choose to spend your money on.

      One

      What is Money?

      What is the first thing that comes to your mind when you hear the word money?

      I need more!

      I hate it!

      It causes me misery because I can’t handle it!

      Or:

      I can afford everything I wish.

      I have enough.

      I live in abundance.

      Chances are that you think the first three—or some similar version of them—if you bought this book. I can understand you completely. I come from a family where money was always scarce due to financial illiteracy and mismanagement. It didn’t matter if my parents earned more or less; they still couldn’t get a hold of it.

      I remember when I was about 13, my parents managed to sell one of our properties for good money. Their first deed afterwards was to go on a huge shopping spree, buying me all kind of stuff to put together a trousseau. It is a very old-fashioned Eastern European thing to do, and certainly wasn’t necessary when I was 13. I truly appreciate their kindness but I know their motivation wasn’t purely generosity. They bought it the moment they had money because they were expecting that they wouldn’t have money later. Their fear turned out to be true.

      Some people are luckier. They are born into a family who are financially literate. I don’t necessarily mean rich. They just know how to handle money and they transfer this knowledge to their children.

      One thing I learned thanks to my parents’ misfortune was that thinking more about money won’t help you make better financial decisions. There are many things to think about when it comes to handling our finances (better mortgage rates, greater credit opportunities), but thinking more will not help. Thinking better might, but not always.

      Making bad financial decisions is almost coded into our DNA. Even if someone is financially literate and great at handling money, they might still fall prey to some traps set by their own brain. One would think that a

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